Kuwait shifts welfare costs to immigrants

KUWAIT CITY
— Kuwait offers generous benefits to citizens: free health and education, subsidized electricity, money gifts to newlyweds and for each child, and low-interest home loans.

But in Kuwait and throughout the Persian Gulf, government officials are wrestling with an economic quandary: how to convert the state from a cash machine that dispenses oil riches to the local citizenry into a lean, mean bureaucracy whose people help pay for the benefits they receive.

Kuwait, whose per capita income is among the highest in the world, has one answer: Make foreign workers - many of them poor - pay for public services.

"From a global view it's unfair," says Ali al-Baghli, a lawyer and former parliament member. "But for Kuwaitis, it's fair." After all, he adds, Kuwait's oil wealth belongs to its citizens, who have the right to enjoy it.

This Gulf sheikdom was a household name a decade ago, when the US organized the largest invasion force since World War II to evict Iraqi troops.

The Iraqi invaders had trashed Kuwait - setting alight more than 750 oil wells, for instance - but the country has pretty much returned to normal. Kuwaitis are again reaping the riches of the country's oil production and paying imported workers to do everything from clean houses to flip burgers to manage businesses.

A walk down a commercial street in Kuwait City is a confusing experience: the geography is Middle Eastern - there are grains of sand underfoot and a few palm trees overhead - but most of the faces in the shops and on the sidewalks in this particular neighborhood are from India, the Philippines, and elsewhere in Asia.

Of the 2.2 million people who live here, only 842,000 are Kuwaiti citizens. The rest are stateless Arabs or expatriates ranging from highly paid investment-fund managers from Lebanon to Bangladeshi laborers who make about a $100 a month.

Large numbers of foreign workers have been part of the economies of the Persian Gulf states ever since the oil boom of the early 1970s. At the time of the Gulf War, some 3.5 million Asians were working in the region.

Two years ago, the government proposed a health-insurance scheme requiring modest annual payments from those who wanted to take advantage of the country's excellent health services - Kuwaitis and foreign workers alike.

The measure reflected a long-running national debate over how to curtail the "welfare state" mentality of many Kuwaitis and cut back on state expenditures. But the parliament, which is elected exclusively by Kuwaiti men, said "no, no, no, not our constituents," says Mr. al-Baghli.

When the scheme was officially instituted in April 2000, the payments were imposed only on foreign workers.

In some respects, the Kuwaiti government isn't asking much. For single workers and heads of household, the annual payment is equivalent to $153. For that they receive health services for everything ranging from checkups to chemotherapy.

It's not a steep price for total medical coverage. But for Adelia Alampay, who earns less than $300 a month working for a company that runs a chain of doughnut shops in Kuwait City, "it hurts, because there's been no salary increase." Her employer doesn't cover any part of the annual payment, she says.

Ms. Alampay - not her real name - has worked for a decade in Kuwait, first as a housemaid, then as an office worker, and for the past five years at the doughnut company.

She sends more than half her income home to the Philippines, where her parents take care of Alampay's five children. "If you think about their future, you will control what you feel inside," she says about the emotional toll of being so far away from her family. "You have to be tough."

Wearing her hair pulled back and a yellow and green uniform, Alampay has a calm, high-cheekboned face and the cheerful resilience that many expatriate Filipinos seem to manifest. When she departed her home in Manila for the Persian Gulf 11 years ago, Alampay's youngest child was 3 months old.

She doesn't complain about the sacrifices she has made, but she displays a kind of bitterness about the inequities she has witnessed in Kuwait. "I'm dreaming that one day there will be no more oil here, and we will find out how [the Kuwaitis] will survive. They have a big head only because of oil," she says.

Alampay shares a room with five other foreign workers, and has only one day off a month, as a company work schedule indicates.

Kuwaitis have long worried about their reliance on foreign workers, but their experiences during the Gulf War - when many expatriates left the country - demonstrated that Kuwaitis themselves could at least maintain basic services.

The more pressing concern is the future, when the supply of oil will shrink and Kuwaitis will have to find new engines to propel their economy. As things stand, with more than 90 percent of the Kuwaiti workforce on the government payroll, the country isn't exactly a hotbed of entrepreneurship or even good business sense.

While there has been much discussion in recent years of lessening the Kuwaiti reliance on oil money - Kuwaiti families still receive generous monthly child subsidies and Kuwaiti newlyweds are entitled to low-interest, longterm housing loans of more than $200,000 - actions haven't followed suit.

That is partly because of the political structure, in which a hereditary monarch rules the country, issuing decrees that must win the approval of an elected legislature. Since the electorate consists only of Kuwaiti males, there is very little constituency for cutting back oil benefits.

Recent increases in the price of oil have also dampened any immediate impulse to change the system. "There are attempts," says Abdullah al-Nibari, a longtime member of parliament, "but I wouldn't say there's urgent pressure to deal with these problems."